U.S. Treasury - Press Releases - Law Enforcement

Treasury Removes Limit on Funds Sent to Burma

May 12, 2008
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Treasury Authorizes Unlimited Personal Remittances to Burma

Washington - The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), in consultation with the Department of State, has moved to ease the humanitarian crisis in Burma by removing the limit on funds that U.S. individuals are allowed to send to family and friends in Burma.

"The people of Burma need all the help we can provide during this crisis," said OFAC Director Adam J. Szubin. "This action will speed the flow of aid to the Burmese people by allowing Americans to send an unlimited amount of funds to their relatives and friends who are in need."

This action, made effective by the issuance of General License No. 15, authorizes U.S. financial institutions to process transfers of funds, unlimited in amount, for noncommercial, personal remittances to or from Burma, or for or on behalf of an individual ordinarily resident in Burma. Prior to the issuance of this general license, noncommercial, personal remittances to Burma were only permitted if the total remittances did not exceed $300 per Burmese household in any consecutive three-month period.

General License No. 15 does not allow transfers by, to, or through persons blocked under the Burma sanctions program. This license, however, does allow transfers to be made utilizing the services of blocked financial institutions in Burma, provided the transfers are made through third-country banks and that debits or credits are not made to any blocked account that is on the books of a U.S. financial institution.

In addition, OFAC has amended General License No. 14. The previously issued General License No. 14 authorized the transfer of funds in support of not-for-profit humanitarian or religious activities in Burma only if they involved U.S. or third-country nongovernmental organizations (NGOs). The Amended General License No. 14 expands that authorization, for a period of 120 days, to allow funding to any organization or individual engaged in not-for-profit humanitarian or religious activities in Burma, with the exception of the Government of Burma itself or any person blocked under the Burma sanctions program.

OFAC expects to re-issue the original General License No. 14, allowing transfers consistent with its terms to continue upon the expiration in 120 days of the Amended General License No. 14. U.S. persons also may continue to make charitable donations to NGOs in Burma that are authorized to operate pursuant to specific licenses that have been issued by OFAC.

Please visit the following link to access the new and amended general licenses:

http://www.treasury.gov/offices/enforcement/ofac/actions/20080509.shtml

OFAC also will send a corresponding regulatory amendment to the Federal Register for publication.

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Under Sec McCormick Remarks on Global Financial Turmoil and its Implications for China

May 9, 2008
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Treasury Under Secretary for International Affairs David McCormick
Remarks on Global Financial Turmoil and its Implications for China

Shanghai �Thank you, Vice Chairman Zhu, for your kind introduction. I would like to thank the co-chairmen of the forum, Governor Zhou and Mayor Han, as well as the co-hosts of the forum at the CBRC, the CSRC, and the CIRC for inviting me to deliver remarks today. It is my distinct honor to participate in this inaugural session of the Lujiazui Financial Forum. I anticipate this year's event will be the first of many lively and informative sessions.

Today I'd like to talk about the recent financial turmoil in the United States � why it happened, how we have responded, and what lessons we have drawn for financial regulation and policy for the longer term. I will also suggest some of the lessons that I hope China will draw from this episode and why recent events should be seen as all the more reason for China to push ahead with financial sector reform.

I will make the case that continued financial sector reform and development is critical to China's own future growth and prosperity. Foreign participation � and the critical technology and knowhow that foreign investors bring � will help accelerate China's financial sector development.

Responses to the Financial Market Turmoil

In the United States

Why did this financial turmoil occur? A long period of benign credit conditions � relatively stable asset markets, low interest rates, and low inflation � encouraged many investors to seek higher returns. Responding to this demand, the financial services sector created a variety of complicated new products that diversified risk and lowered borrowing costs. Financial innovation brought enormous benefits, helping many people to move into homes, others to start or expand businesses, and investors to diversify their risk and enhance returns. Complacency about risk, however, encouraged a loosening of credit standards and an erosion of market discipline among investors, regulators, and credit rating agencies alike.

Last summer, these new vulnerabilities in our financial system became clear. Looser credit standards in the housing market, combined with an end to rapid home-price appreciation, led to a significant rise in delinquent mortgages. This in turn contributed to immediate and unexpected losses for investors and a reconsideration of the risk-reward relationship � first in housing, and soon after, across all asset classes. The shaken investor confidence in housing assets had a domino effect throughout world markets, ratcheting up demand for cash and liquidity, and curtailing the pace of the new lending and investment necessary for strong growth to continue.

In short, those in the United States and around the world were reminded of an age-old lesson: financial innovation, for all its advantages, sometimes produces unexpected consequences to which policymakers must quickly and creatively react.

Policy Responses: Domestic and International

Policymakers in the United States have responded quickly and aggressively to stabilize markets, reduce the impact of the turmoil on the real economy, and address underlying regulatory and policy weaknesses. At the same time, we have sought to avoid overreacting with regulations or policy responses that would stifle innovation or distort the natural self-correcting forces of markets.

Treasury Secretary Henry Paulson has led the U.S. government effort to ensure a comprehensive, timely and appropriate response to the turmoil. He and other authorities have urged banks to promptly recognize and report losses, and raise additional capital. Many global financial institutions have done just that � reporting subprime-related losses of over $300 billion and raising additional capital of more than $200 billion.

The U.S. government has acted decisively to help soften the negative impact of these events on the real economy, through fiscal policy and a series of initiatives to help families stay in their homes. The $150 billion economic stimulus package will support consumer and business spending as we weather the current economic slowdown, and will lead to the creation of over 500,000 new jobs that would not have been created otherwise.

The U.S. Federal Reserve and other central banks have taken focused, and sometimes coordinated, actions to protect the financial system from severe disruption by ensuring that markets have access to financing.

There are already some early indicators that this combination of actions is beginning to have the desired effect, as markets appear to be gaining confidence and the availability of credit has improved modestly.

As the immediate remedies take effect, we have also begun to focus on the weaknesses in business practices of financial institutions that this experience has revealed, and on fragmented U.S. and European regulatory structures that had difficulties guarding against or responding to modern challenges.

The President's Working Group on Financial Markets recently recommended changes to mitigate systemic risk and restore investor confidence to facilitate stable economic growth. The President and Secretary Paulson have welcomed these recommendations, and we are now implementing them.

At Treasury, we have also worked closely with counterparts in major economies around the world, including China, to address market instability. The Financial Stability Forum (FSF), which brings together the supervisors, central banks, and finance ministries of major financial centers, has been critical to this effort. The FSF has produced a series of recommendations that echo and complement efforts underway in the United States. These proposals include:

Strengthening prudential oversight of capital adequacy, liquidity and risk management;
Enhancing transparency and improved valuation, particularly for structured products;
Revising and clarifying the role and use of credit ratings;
Improving the responsiveness of authorities to risks; and,
Creating robust arrangements for dealing with stress in the financial system.

There is no silver bullet to place financial markets on a sound footing or prevent past excesses from recurring, but each of these specific proposals represents an important step toward addressing the challenges we face. Taken together, they constitute a clear and significant response to the underlying weaknesses that contributed to the turmoil in global financial markets.

A Look Ahead

While our first priority is working through the current turmoil in the capital markets and the housing downturn, we are also considering longer term changes to our financial regulatory system to maintain efficient, safe, and sound U.S. capital markets. This dynamic process requires balancing appropriate regulation with the need for an environment that fosters innovation.

Specifically, Treasury has considered how to modernize our financial regulatory structure, which resembles a patchwork of overlapping agencies and responsibilities cobbled together over the past 75 years. Secretary Paulson's recently released Blueprint for a Modernized Financial Regulatory Structure proposes an optimal financial regulatory model that ensures market stability, safety and soundness for federal guarantees, and consumer and investor protection. It calls for a market stability regulator, a prudential financial regulator, and a business conduct regulator. We believe that this approach will foster innovation, mitigate risk, and enhance the competitiveness of America's capital markets.

Effects on the US and Global Economies

Although we have taken major policy steps to cushion the consequences of current market events on the real economy, they are undoubtedly having an impact. Growth has already slowed significantly to 0.6 percent in the last quarter of 2007 and the first quarter of this year. The combination of stress in financial markets, the housing correction, and high energy prices will weigh on growth through 2008, though fiscal stimulus will support the economy while corrections take place in the housing and financial markets. Despite these near-term challenges, our longer-term growth prospects remain sound because of the underlying strength of our institutions, the flexibility of our markets, and our capacity to absorb technological change.

Recent events have also made clear that emerging markets are not decoupled from events in the United States. As U.S. growth has slowed, so too has our demand for imports, affecting exporters in a variety of nations, including China. At the same time, emerging market growth has shown resilience in the face of a U.S. showdown. Most emerging market countries have followed prudent macroeconomic policies, giving them room to respond to slowing external demand. Stronger domestic demand growth in emerging markets like China is playing an important role in cushioning the impact of the U.S. slowdown.

Financial Market Turmoil and China

China has weathered the recent turmoil relatively well. Stronger growth in domestic consumption has offset much of the weakness in external demand. Moreover, a slowing of overall Chinese economic growth from last year's pace may in fact be welcome in addressing concerns about excessive growth in investment and rising domestic inflation. The sharp fall in Chinese equity prices since last October appears more due to domestic factors than to linkages with global stock markets.

Financial Reform and Future Growth

Despite its relatively benign effects thus far, I fear the recent bout of turbulence in global financial markets is being viewed by some in China as a reason to slow or pause financial sector reform. I hope Chinese policymakers will ask the more pertinent question: What lessons should China's leaders draw from recent events as they consider the pace and potential benefits of financial sector reform?

This morning's presentations highlighted the giant leaps China has made in financial sector reform in the past decade, from the banking sector to the stock, foreign exchange, and bond markets. These reforms have been important for laying the foundation to address the key challenges ahead in China's financial sector development. These challenges include:

Increasing access to direct financing through the equity and bond markets;
Developing a yield curve for government bonds that can be used as the baseline for pricing other financial products;
Introducing a variety of financial products to hedge risk; and,
Fostering the growth of institutional investors.

These are the basic building blocks of financial sector development, not exotic products on the cutting edge of financial innovation. There are risks, to be sure, in carrying out these reforms. Financial regulation and supervision must be developed in tandem. But policymakers in China must also recognize that there will be significant costs if China slows the development and reform of its financial sector. Important gains for China and its people would be left unrealized. An ambitious reform agenda will advance China's economic goals in four important ways by:

Rebalancing the sources of China's growth to ensure that it is more harmonious, more energy and environmentally efficient, and provides greater welfare for Chinese households;
Creating effective macroeconomic policy tools to ensure stable, non-inflationary growth;
Supporting China's transition to a market-driven and innovation-based economy; and,
Assisting in dealing with demographic challenges.

First, as China's economy becomes more sophisticated, an efficient, well-developed financial sector is essential to channeling capital to the new ideas, businesses, and entrepreneurs that will power future growth. As China's economy becomes more complex, so too will its need for financial services. A more developed financial sector is necessary to fund the industries of tomorrow.

A more developed financial sector is also essential in shifting to a growth model that can be sustained in the future, one less dependent on industrial activity and exports, and one more oriented towards services and household demand. Key to this is reducing the need for very high saving rates. A greater diversity of financial instruments for saving, risk diversification, and consumer borrowing would relieve some of the need for precautionary saving.

A higher risk adjusted return from a broader array of financial assets would allow Chinese households to achieve their financial goals � such as buying a house, educating their children, or achieving a secure retirement � without having to set aside large portions of their current income. A more developed financial sector will also provide Chinese enterprises with options beyond reinvesting earnings primarily in expanding their own capacity. This will enhance the efficiency of capital allocation and dampen the volatility of investment cycles.

Third, more developed financial markets will help bring greater stability to China's economy by giving the authorities the macroeconomic tools � flexible and more powerful monetary policy in particular � to assure stable growth and prices. Deeper, interconnected bond markets would give the central bank greater ability to guide market interest rates and credit throughout the economy to ensure continued strong, stable, and non-inflationary growth.

Finally, a robust financial sector will help to enable China to deal with the demographic challenges that lie ahead, including population aging and the provision of healthcare. A deep and sophisticated financial sector will be critical to strengthening the social safety net and providing tools such as health care insurance and retirement investment vehicles necessary to cope with growing demographic pressures.

The Role of Foreign Participation

Greater foreign participation will contribute substantially to financial sector reform, and for that reason, it has been a top priority for the Strategic Economic Dialogue (SED) launched by Presidents Hu and Bush.

We recognize the concerns of some in China who believe that opening the doors to foreign financial firms could jeopardize the position of domestic firms. On the contrary, we believe that increased foreign participation expands the breadth and depth of opportunities for all firms in the market, including domestic Chinese firms. This is not a zero-sum game. Clearly, foreign firms stand to benefit from expanded opportunities in China. But they will also enhance the diversity of financial products in China, improve allocation of capital, and spur innovation, all of which will benefit China's economy and its people.

Foreign investment in Chinese financial institutions has, in fact, turned institutions that were a drain on fiscal resources into engines of growth � creating jobs and strengthening financial sector soundness. Take for example, Shenzhen (shun-jun) Development Bank, which was one of the first banks to be controlled by a foreign investor. Over the past several years, profitability and capital adequacy at the bank have increased significantly, while non-performing loans have declined sharply. The bank is lending more to finance households and medium-sized enterprises.

We have heard from financial institutions across China that meeting the strong demand for experienced personnel is a challenge in this period of rapid expansion. Increased foreign participation in the financial sector will expedite the development of world class financial sector talent within China, benefiting Chinese workers, businesses, and financial centers like Shanghai.

Looking forward, the current approach of offering limited scope for foreign investment in Chinese financial firms hinders the growth opportunities of China's entire financial sector. It leads to unwieldy managerial and ownership arrangements that reduce operational flexibility and the transfer of financial technology. We believe that higher ownership thresholds for foreign firms would benefit the financial sector overall and the Chinese businesses that depend on it to grow their companies and create jobs. China achieved great success by opening its manufacturing sector to foreign investment. This has fostered � not inhibited � growth of Chinese manufacturers. Greater opening in financial services will do the same.

Just as openness to foreign investment is important for strong growth in China, openness to foreign investment is fundamental to the United States. The United States is committed to ensuring a stable and open international financial system. In his Statement on Open Economies last May, President Bush reaffirmed the United States' long-standing policy of welcoming international investment.

Foreign investment creates good jobs, spurs innovation, improves productivity, and results in lower prices and greater variety for consumers in the United States. Foreign direct investment flows into the United States were $204 billion in 2007, which is nearly double the level of a decade earlier. Research shows that foreign-owned firms in the United States directly employ over 5 million Americans � 4.5 percent of all private sector employment. These are good jobs, paying more than 25 percent higher compensation on average than other private sector jobs. Foreign firms also indirectly employ about the same number of Americans. Foreign-owned firms contribute almost six percent of U.S. output, 14 percent of U.S. R&D spending, and 19 percent of U.S. exports.

Despite the benefits of foreign investment, there is rising protectionist sentiment around the world that poses a dangerous threat to the global economy. We unfortunately see some of these same protectionist forces in our own country. A number of countries are considering new or revised investment review mechanisms, some of which have the potential to impose broad barriers. We are engaging our counterparts bilaterally, and through multilateral institutions to emphasize the importance of crafting policies that are predictable for investors and ensure proportional responses to genuine national security concerns. Investment reviews must not be used to promote protectionist policies.

I know some of you may have concerns about the investment review process in the United States, known as CFIUS, or the Committee on Foreign Investment in the United States, a committee that is chaired by the U.S. Treasury. However, I want to make clear that the legal authority of CFIUS is narrowly targeted to address only acquisitions that raise genuine national security concerns, not broader economic interests or industrial policy factors.

Moreover, we are committed to living up to both the letter and the spirit of the new law and the President's open investment statement. Last month, Treasury issued proposed CFIUS regulations to implement our new Foreign Investment law which passed our Congress and was signed by the President last year. The new regulations clarify and improve our existing process, reinforce strong open investment principles and procedural protections for foreign investors, and ensure a more timely and efficient review process. Our focus in this area reflects Secretary Paulson's strong commitment to maintaining an open investment climate in the United States.

Sustaining China's Growth

For all the reasons I have described, financial market development is key to assuring that strong Chinese growth is sustained in the future. This is vital to China and the global economy. But financial market development alone is not enough. China also needs to rebalance the sources of its growth away from heavy industry and exports towards products and services for Chinese households. This is essential if China is to reduce inequality, assure environmentally harmonious growth, and trim its huge and growing current account surplus. Achieving these goals will require China to take structural measures to build a strong social safety net and channel the growing profits of Chinese enterprises to their owners.

Also critical to sustained growth for China is greater exchange rate flexibility. A more flexible RMB would give China's policy makers greater scope to adjust monetary policy as needed to maintain price stability and to address the risks of excessive investment and credit growth. Just as it was important for the Federal Reserve to have a monetary policy framework that allowed it to move quickly to maintain financial stability, the People's Bank needs to be able to move rapidly to contain inflation today and safeguard financial stability.

Exchange rate flexibility is also needed to provide the price signals that will ensure a more market-driven allocation of resources and investment. RMB appreciation would provide greater incentives for domestic firms to direct investment towards the domestic market and produce goods and services for Chinese consumers. In this regard, the increased pace of RMB appreciation since last October is welcome. We urge China's leaders to maintain this accelerated pace.

Conclusion

There are many reasons to believe that the appetite for economic reform in China may be waning, after years of demanding reforms. Each successful reform brings calls from around the world for yet more. Global volatility in financial markets may give China's leaders pause as they chart the course ahead. However, I urge our friends in China to use the lessons of the current turmoil to sharpen their focus and strengthen their commitment to the bold path of financial sector reform on which they have embarked. It is a critical component of China's future, economic growth, and stability.

As I reflect on recent events, I am confident that the United States will pass through this current phase of turmoil and return to the path of sustained growth. I am also convinced that China will successfully overcome the challenges that it faces in achieving sustained long term growth and stability in an increasing complex economy. We must not forget that our economies are more interconnected and more dependent on each other than ever before. Together, we can bring prosperity to our own countries and the world economy.

Treasury Speeds Aid to Burma

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May 7, 2008
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Treasury Issues General License to Speed the Flow of Aid to Burma

Washington - The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), in consultation with the Department of State, issued a general license to help facilitate the flow of funds for humanitarian assistance to the Burmese people in the wake of Cyclone Nargis.

"The American people continue to demonstrate their concern for the people of Burma, particularly as they reel from the devastation of Cyclone Nargis," said OFAC Director Adam J. Szubin. "This license will help to clear the way for additional humanitarian aid to make it to the Burmese people swiftly and efficiently."

This general license is particularly needed in the wake of Cyclone Nargis and the resulting devastation. The issuance of this general license will ease the work of U.S. and third-country nongovernmental organizations (NGOs), as most will no longer need to apply to OFAC for specific licenses or registration numbers in order to transfer funds to Burma to support their humanitarian activities. The general license authorizes the export and reexport of financial services, including the flow of humanitarian funds, to Burma in support of the not-for-profit humanitarian or religious activities in Burma of U.S. or third-country NGOs.

Prior to the issuance of the general license, sending funds to Burma, which is generally prohibited under the Burma sanctions program, would have required the issuance of a specific license by OFAC. NGOs may continue to rely upon outstanding specific licenses and may apply for specific licenses to engage in funds transfers in support of humanitarian activities beyond the scope of the general license.

Existing general licenses already authorize the exportation or reexportation of financial services ordinarily incident to the exportation of goods, technology, or services, other than financial services, to Burma. This action will allow U.S. individuals and entities to send, and U.S. financial institutions to transfer, funds to Burma to be used to support the humanitarian activities of U.S. or third-country NGOs in Burma. Third-country individuals and entities also will be able to transfer dollar-denominated funds through the United States to be used to provide humanitarian assistance by NGOs in Burma. This general license does not authorize the provision of financial services directly or indirectly to the Government of Burma or to persons blocked under the Burma sanctions and such services remain prohibited.

All transfers authorized by this general license may be made utilizing the services of blocked financial institutions in Burma, provided the transfers are made through third-country banks (no debits or credits may be made to any blocked account on the books of a U.S. financial institution).

Please visit the following link to access the general license:
www.treasury.gov/offices/enforcement/ofac/programs/burma/gls/burmagl14.pdf

OFAC also will be sending a corresponding regulatory amendment to the Federal Register for publication.

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Treasury Targets FARC

May 7, 2008
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Treasury Targets FARC Money Exchange House

Washington - The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today designated a Colombian money exchange house for acting on behalf of and materially assisting the narcotics trafficking activities of the Revolutionary Armed Forces of Colombia, a narco-terrorist group also known as the FARC. This is OFAC's fourth action against the FARC in the past six months.

"Today's action targets the FARC's drug trafficking and terror activities by undermining its financial network," said OFAC Director Adam J. Szubin. "This deals another blow to the FARC's ability to fund its operations by laundering criminal proceeds through the international financial system."

Today's designation targets Mercurio Internacional S.A., a Colombian money exchange house headquartered in Bogota, Colombia, with several branches throughout Colombia. The FARC used this Colombian money exchange house--or "casa de cambio" as they are commonly known in Colombia--to launder narcotics proceeds from its Eastern Bloc and, more specifically, the 27th Front. The FARC sells its illicit foreign currency to domestic money exchange businesses or profesionales del cambio. These profesionales del cambio then sell the foreign currency to casas de cambio that, like a bank, can export the foreign currency from Colombia.

Mercurio Internacional accepted foreign currency from the FARC via a number of profesionales del cambio. The FARC derived this foreign currency from drug sales. Mercurio Internacional would then convert the foreign currency back into pesos for the FARC to use in Colombia to fund its activities. For example, Cambios El Trebol, a professional del cambio that was designated by OFAC on April 22, 2008, is one customer of Mercurio Internacional that would sell the FARC's illicit foreign currency to Mercurio Internacional in return for Colombian pesos.

The Eastern Bloc is the strongest military faction of the FARC and uses murder, extortion, kidnapping, and drug trafficking to further the financial and political goals of the FARC. Luis Eduardo Lopez Mendez (alias "Efren Arboleda") leads the 27th Front and ultimately reports to FARC Secretariat Member Victor Julio Suarez Rojas (alias "Mono Jojoy"). Suarez Rojas is the FARC's Chief of Military Operations and formerly served as the commander of the Eastern Bloc. Victor Julio Suarez Rojas and Luis Eduardo Lopez Mendez were designated by OFAC in February 2004 and November 2007, respectively.

On May 29, 2003, President George W. Bush identified the FARC as a significant foreign narcotics trafficker pursuant to the Foreign Narcotics Kingpin Designation Act. Previously, in 2001, OFAC designated the FARC as a Specially Designated Global Terrorist pursuant to Executive Order 13224, and in 1997 the FARC was designated as a Foreign Terrorist Organization by the Secretary of State.

Today's action continues ongoing efforts under the Foreign Narcotics Kingpin Designation Act to apply financial measures against significant foreign narcotics traffickers worldwide. In addition to the 68 drug kingpins that have been designated by the President, 393 businesses and individuals have been designated pursuant to the Kingpin Act since June 2000. Today's designation would not have been possible without support from the Drug Enforcement Administration.

Today's action freezes any assets Mercurio Internacional may have under U.S. jurisdiction and prohibits U.S. persons from conducting financial or commercial transactions with this entity. Penalties for violations of the Kingpin Act range from civil penalties of up to $1,075,000 per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5,000,000. Criminal fines for corporations may reach $10,000,000. Other individuals face up to 10 years in prison for criminal violations of the Kingpin Act and fines pursuant to Title 18 of the United States Code.

REPORTS

For a complete list of the individuals and entities designated today, please visit:
http://www.treasury.gov/offices/enforcement/ofac/actions/index.shtml

To view previous OFAC actions directed against the FARC, please visit:

Treasury Action against the FARC on April 22, 2008.

Treasury Targets FARC Financial Network in Colombia

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April 22, 2008
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Treasury Targets FARC Financial Network in Colombia

Washington −The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today designated two entities and four individuals for acting on behalf of the Revolutionary Armed Forces of Colombia or FARC, a narco-terrorist group.

"Today's designation continues our targeted campaign to take down the FARC's financial networks, especially those utilized to launder their narcotics proceeds," said Barbara C. Hammerle, Deputy Director of OFAC. "This is OFAC's third action in the last five months against the FARC's deadly narco-terrorist organization. Our actions complement the efforts of the Colombian government against the FARC."

On May 29, 2003, President George W. Bush identified the FARC as a significant foreign narcotics trafficker pursuant to the Foreign Narcotics Kingpin Designation Act. In November 2001, the FARC was designated as a Specially Designated Global Terrorist pursuant to Executive Order 13224. In October 1997, the FARC was designated as a Foreign Terrorist Organization by the Secretary of State.

Today's designations focus on a FARC financial network that involves two Colombian money exchange business, Cambios El Trebol and Cambios Nasdaq Ltda. Both are based in Bogota, Colombia. The FARC used these Colombian money exchange businesses, or "profesionales del cambio" as they are commonly known in Colombia, to launder narcotics proceeds. Cambios El Trebol and Cambios Nasdaq Ltda. accepted foreign currency from the FARC that was derived from drug sales. In exchange, the two businesses provided pesos to the FARC that could fund its activities in Colombia. Myriam Rincon Molina and Jose Edilberto Camacho Bernal, two individuals who are tied to these money exchange businesses and who act on behalf of the FARC, were also designated today.

Today's OFAC action also targets Nilson Calderon Velandia (alias "Villa") and Carlos Olimpo Diaz Herrera, both major drug traffickers for the FARC. Nilson Calderon Velandia is responsible for the production and sale of cocaine for the FARC's 27th Front and also manages contacts with other drug traffickers who export the FARC's drugs from Colombia. Carlos Olimpo Diaz, in addition to being responsible for the production and sale of cocaine for the FARC's 27th Front, owns Cambios Nasdaq Ltda.

The FARC's 27th Front is led by Luis Eduardo Lopez Mendez (alias "Efren Arboleda"), who ultimately reports to FARC Secretariat Member Victor Julio Suarez Rojas (alias "Mono Jojoy"). Suarez Rojas is the FARC's Chief of Military Operations and has served as commander of the Eastern Bloc of the FARC. Victor Julio Suarez Rojas and Luis Eduardo Lopez Mendez were previously designated by OFAC on February 18, 2004, and November 1, 2007, respectively.

Today's action today continues ongoing efforts under the Foreign Narcotics Kingpin Designation Act to apply financial measures against significant foreign narcotics traffickers worldwide. In addition to the 68 drug kingpins that have been designated by the President, 392 businesses and individuals have been designated pursuant to the Kingpin Act since June 2000. Today's designation would not have been possible without support from the Drug Enforcement Administration.

Today's designation action freezes any assets the six designees may have under U.S. jurisdiction and prohibits U.S. persons from conducting financial or commercial transactions with these individuals and entities. Penalties for violations of the Kingpin Act range from civil penalties of up to $1,075,000 per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5,000,000. Criminal fines for corporations may reach $10,000,000. Other individuals face up to 10 years in prison for criminal violations of the Kingpin Act and fines pursuant to Title 18 of the United States Code.

REPORTS

27th FARC Front Financial Flow

For a complete list of the individuals and entities designated today, please visit:
http://www.treasury.gov/offices/enforcement/ofac/actions/index.shtml

To view previous OFAC actions directed against the FARC, please visit:

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Dep Asst Sec Glaser Testimony before House Committee on Foreign Affairs

April 17, 2008
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Deputy Assistant Secretary for Terrorist Financing
and Financial Crimes Daniel Glaser
Testimony Before the House Committee on Foreign Affairs
Subcommittee on the Middle East and South Asia
and the Subcommittee on Terrorism, Nonproliferation and Trade

Washington - Chairman Ackerman, Chairman Sherman, Representative Pence, Representative Royce and distinguished members of the Committee, thank you for the opportunity to speak with you today about the Treasury Department's efforts to counter Iran's nuclear program and its deliberate support of terrorism. I want to thank this Committee for its continued support and guidance in our efforts against an Iranian regime that continues to pursue threatening activities. Today, I will focus my remarks on the Treasury Department's strategy and actions to counter this threat and the impact we have achieved on Iranian financial institutions and businesses.

The Iranian Threat

Iran poses significant threats to the international community. Chief among them is the regime's continued pursuit of nuclear ambitions in defiance of United Nations Security Council resolutions. Another paramount threat is Iran's provision of financial and material support to terrorist groups. The combination of these two threats presents a lethal challenge that is exacerbated by Iran's integration into the international financial system, and its deceptive financial practices.

Threat of Iran's Nuclear Ambition

Iran's continued pursuit of nuclear and missile programs present a deliberate and intolerable threat to the international community. Iran has ignored calls from the international community to suspend its enrichment-related reprocessing and heavy water-related activities, and defied numerous U.N. Security Council resolutions including:

Resolution 1696 (2006)
Resolution 1737 (2006)
Resolution 1747 (2007)
Resolution 1803 (2008)

The international community reiterated its position on this issue most recently on March 3, 2008, when the U.N. Security Council adopted Resolution 1803, imposing further sanctions on Iran for its refusal to suspend its proliferation sensitive nuclear activities. Iran has thus far ignored this recent resolution, announcing that it would proceed forward in expanding its uranium enrichment activities. Iran's defiance and disregard for international concern adds to the gravity of the threat.

Threat of Iran's Support of Terrorism

The threat we face from Iran is not limited to its pursuit of a nuclear capability. Another dynamic of Iran's threat is its provision of financial and material support to terrorist groups. Iran has long been a state sponsor of terrorism and continues to support an unparalleled range of terrorist activities. For example, Tehran arms, funds, and advises Hizballah, an organization that has killed more Americans than any terrorist network except for al-Qa'ida, and does so via the Qods Force, a branch of the Islamic Revolutionary Guard Corps. In addition, Iran provides extensive support to Palestinian terrorist organizations, including the Palestinian Islamic Jihad (PIJ) and Hamas. In the case of PIJ, Iran's financial support has been contingent upon the terrorist group carrying out attacks against Israel. And we are all familiar with Iran's funding, training, and equipping of select Shi'a extremist groups in Iraq, further destabilizing that country and resulting in deaths of Americans, Iraqis and others. Iran's Qods Force also provides weapons and financial support to the Taliban to support anti-U.S. and anti-Coalition activity in Afghanistan

Iran utilizes the international financial system as a vehicle to fund these terrorist organizations. As Under Secretary Levey has previously testified, the Iranian regime operates as the central banker of terrorism, spending hundreds of millions of dollars each year to fund terrorism.

Iran's Integration into the International Financial System

Iran is deeply integrated in the international financial system. Iranian state-owned banks have dozens of branches located all over the world. Additionally, Iranian banks have correspondent accounts at foreign banks for an even broader reach into the international financial system. Moreover, Iranian individuals and entities maintain accounts at foreign financial institutions.

Iran's integration into the global economy and the international financial system gives the Iranian regime global financial capability to support its threatening activities and exposes the international financial system to illicit financing risks posed by the regime.

Iran's Deceptive Financial Practices

Iran uses its global financial ties to pursue both the threat of terrorism and a nuclear program through an array of deceptive practices specifically designed to avoid suspicion and evade detection from the international financial community. Iran uses its state-owned banks for its nuclear and missile program and for financing terrorism. For example, Tehran uses front companies and intermediaries to engage in ostensibly legitimate commercial transactions that are actually related to its nuclear and missile programs. These front companies and intermediaries enable the regime to obtain dual-use technology and materials from countries that would typically prohibit such exports to Iran.

Another method Iranian banks use to evade controls is to ask other financial institutions to remove their names when processing transactions through the international financial system. This practice is intended to elude the controls put in place by responsible financial institutions and has the effect of potentially involving those institution in transactions they would never engage in if they knew who, or what, was really involved. This practice allows Iran's banks to remain undetected as they move money through the international financial system to pay for the Iranian regime's illicit and terrorist-related activities. This practice is even used by the Central Bank of Iran to facilitate transactions for sanctioned Iranian banks.

Fundamental Deficiencies in Iran's AML/CFT Regime

In addition to Iran's deceptive financial conduct, substantial deficiencies in Iran's anti-money laundering and combating the financing of terrorism (AML/CFT) regime present a significant vulnerability to the international financial system. Iran lacks an acceptable system of laws and enforcement capabilities that would allow it to detect and prevent money laundering or terrorist financing. Although Iran adopted an anti-money laundering law this year, its content has been heavily criticized by both the Financial Action Task Force (FATF) and International Monetary Fund (IMF) for failing to meet international standards. Moreover, both the FATF and IMF have recognized broader deficiencies in Iran's AML/CFT regime to include:

Insufficient criminalization of money laundering.
Failure to criminalize terrorist financing.
Lack of AML/CFT supervision.
Lack of a financial intelligence unit.
Lack of sanctions implementation.
Lack of international cooperation in AML/CFT investigations.

As FATF has stated in its advisories to the international financial system, these core AML/CFT deficiencies present a substantial vulnerability to the international financial system. The FATF took unprecedented measures to warn the international financial system about the risks arising from the deficiencies in Iran's AML/CFT.

Treasury's Actions to Address the Threat

Addressing this multifaceted threat � the threat of both proliferation and terrorism, reinforced by Iran's deceptive financial conduct and systemic AML/CFT deficiencies �requires a multifaceted strategy, including an essential financial component. In the years since September 11, we have substantially increased our understanding of vulnerabilities in the international financial system and how terrorist and other illicit financial networks exploit those vulnerabilities. Treasury's strategy to combat the threat that Iran presents, and application of financial pressure to the Iranian regime, builds upon these experiences and consists of three inter-related initiatives:

Developing and implementing targeted financial measures to combat Iran's proliferation and terrorism support activities;
Maximizing the impact of U.S. financial actions by securing international support; and
Engaging in a strategic dialogue with the international private sector to explain the risks of doing business with Iran.

A. Direct U.S. Action Utilizing Treasury Authorities

The U.S. has maintained trade and financial-related sanctions program against Iran for almost 30 years. The current program prohibits virtually all commercial trade between the U.S. and Iran. Our efforts in recent years have focused on a conduct-based targeted financial action aimed at disrupting Iran's proliferation and terrorism activities. We have shown that these types of targeted, conduct-based financial measures aimed at particular bad actors can be quite effective, in part because they unleash market forces by highlighting risks and encouraging prudent and responsible financial institutions to make the right decisions about the business in which they are engaged. They give us a concrete way in which to target directly those individuals and entities we know are bad actors and to strike at the heart of their operations.

Executive Order 13382 � Targeting WMD Proliferators and Their Networks

The Treasury Department relies on Executive Order 13382, a targeted financial sanctions authority, for imposing targeted financial sanctions against weapons of mass destruction (WMD) proliferators and their supporters to pressure Iran. Executive Order 13382 was issued by President Bush in 2005 and added a powerful tool to the array of options available to combat WMD proliferation. By prohibiting U.S. persons from engaging in transactions with entities and individuals targeted by the order, we can effectively deny proliferators and their supporters access to the U.S. financial and commercial systems, cutting them off from the benefits of our economy. These prohibitions have powerful and far-reaching effects, as the suppliers, financiers, transporters, and other facilitators of WMD networks tend to have commercial presences and accounts around the world that make them vulnerable to exactly this kind of financial action, particularly since so many of the transactions are denominated in dollars.

To date, under Executive Order 13382 the Departments of Treasury and State have designated 52 Iran-related individuals and entities as supporting Iran's and missile programs. Targeted entities could range from those under the direct control of the Government of Iran to facilitators in the support network that act as conduits. Some prominent examples include:

Aerospace Industries Organization - The Aerospace Industries Organization (AIO), a subsidiary of the Iranian Ministry of Defense and Armed Forces Logistics, is the overall manager and coordinator of Iran's missile program. AIO oversees all of Iran's missile industries and was designated in 2005 when the Executive Order 13382 was first issued. AIO was also identified by the UNSC Resolution 1737 the following year in 2006 and subject to target sanctions for its involvement in Iran's nuclear program.

Treasury has designated numerous related AIO organizations, including, Sanam Industrial Group and Ya Mahdi Industries Group, both designated for their ties to AIO. Sanam Industrial Group has purchased millions of dollars worth of equipment on behalf of the AIO from entities associated with missile proliferation. Ya Mahdi Industries Group is subordinate to AIO and has been involved in international purchase of missile-related technology and goods on behalf of the AIO. These entities were also identified and sanctioned under UNSCR 1747.

Atomic Energy Organization of Iran - The Atomic Energy Organization of Iran (AEOI) is the main Iranian organization for research and development activities in the field of nuclear technology, including Iran's centrifuge enrichment program. Treasury also designated AEOI in 2005, which was then followed by its designation under UNSC Resolution 1737. Treasury has designated numerous subsidiaries of AEOI network including:

Kalaye Electric Company, Kavoshyar Company, and Pioneer Energy Industries Company are owned or controlled by the AEOI or acting for or on its behalf. Kalaye Electric Company has been linked to Iran's centrifuge research and development efforts. Kalaye is also listed in the Annex to UN Security Council Resolution 1737 as subject to targeted sanctions because of its involvement in Iran's nuclear program. Kavoshyar Company's sole shareholder is AEOI. Pioneer Energy Industries Company provides services to AEOI, including technological support.
Pars Tarash and Farayand Technique are owned or controlled by, or act or purport to act for or on behalf of the AEOI. Pars Tarash and Farayand Technique were also listed in the Annex to UNSCR 1737 as subject to targeted sanctions for their involvement in Iran's centrifuge program and were identified in reports of the International Atomic Energy Organization (IAEA).

Treasury has also used this authority to designate several state-owned Iranian banks, including:

Bank Sepah � Bank Sepah is the fifth largest Iranian state-owned bank, designated in January 2007 for providing extensive financial services to Iranian entities responsible for developing missiles capable of carrying weapons of mass destruction. Bank Sepah was sanctioned by UNSCR 1747 in March that same year. Since at least 2000, Bank Sepah has also provided a variety of critical financial services to Iran's missile industry, arranging financing and processing dozens of multi-million dollar transactions for AIO, which has been designated by the U.S. for its role in overseeing all of Iran's missile industries. By cutting off Sepah from the U.S. and the international financial system, we have made it more difficult for Iran to finance some of its proliferation-related activities.

Bank Melli � Bank Melli is Iran's largest bank and provides banking services to entities involved in Iran's nuclear and ballistic missile programs, including entities listed by the UN for their involvement in those programs. Through its role as a financial conduit, Bank Melli has facilitated numerous purchases of sensitive materials for Iran's nuclear and missile programs. This includes handling transactions in recent months for Bank Sepah, Defense Industries Organization, and Shahid Hemmat Industrial Group. Following the designation of Bank Sepah under UNSCR 1747, Bank Melli took precautions not to identify Sepah in transactions Entities owned or controlled by the IRGC or the Qods Force use Bank Melli for a variety of financial services. From 2002 to 2006, Bank Melli was used to send at least $100 million to the Qods Force. When handling financial transactions on behalf of the IRGC, Bank Melli has employed deceptive banking practices to obscure its involvement from the international banking system. For example, Bank Melli has requested that its name be removed from financial transactions.

Bank Mellat - Bank Mellat provides banking services in support of Iran's nuclear entities, namely the Atomic Energy Organization of Iran (AEOI) and Novin Energy Company. Both AEOI and Novin Energy have been designated by the United States under E.O. 13382 and by the UN Security Council under UNSCRs 1737 and 1747 respectively. Bank Mellat services and maintains AEOI accounts, mainly through AEOI's financial conduit, Novin Energy. Bank Mellat has facilitated the movement of millions of dollars for Iran's nuclear program since at least 2003. Transfers from Bank Mellat to Iranian nuclear-related companies have occurred as recently as this year.

Executive Order 13224 - Targeting Entities that Commit, or Support Terrorism

The Treasury Department targets Iran's support for terrorism utilizing Executive Order 13224. This Executive Order, issued immediately after the September 11 attacks, allows Treasury to designate and block the assets of individuals and entities controlled by, acting on behalf of, or providing support to named terrorist organizations. This has the effect of freezing the target's assets that are held by U.S. persons and preventing U.S. persons from having any future dealings with them.

Using this terrorism authority, we have been able to expose Iran's terrorist support infrastructure. Two examples include:

Bank Saderat Iran � In 2006, the Treasury Department initially took action against one of Iran's largest state-owned banks under the country sanctions program, cutting the bank from indirect access to the U.S. financial system revoking its authority to conduct U-turn transactions. In 2007, we intensified the action against Bank Saderat and officially designated it under E.O. 13224 as a supporter of terrorism.

Government of Iran uses Bank Saderat to transfer money to terrorist organizations, most notably Hizballah and Hamas. From 2001 to 2006, Bank Saderat transferred $50 million from the Central Bank of Iran through its subsidiary in London to its branch in Beirut for the benefit of Hizballah fronts in Lebanon that support acts of violence.

Qods Force (IRGC Qods Force) - The Qods Force, a branch of the IRGC, provides material support to the Taliban, Lebanese Hizballah, Hamas, Palestinian Islamic Jihad, and the Popular Front for the Liberation of Palestine-General Command (PFLP-GC).

The organization is the regime's primary instrument for providing lethal support to the Taliban. It provides weapons and financial support to the Taliban to support to anti-U.S. and anti-Coalition activity in Afghanistan. The Qods Force has also funded Hizballah with $100 to $200 million and has assisted Hizballah in rearming in violation of UN Security Council Resolution 1701.

B. Securing International Action

The effectiveness of targeted financial sanctions and other measures is significantly enhanced when other countries take similar actions. Accordingly, a significant part of the Treasury Department's efforts related to Iran has been devoted to a broader U.S. government campaign to facilitate international action against Iran's support of terrorism and nuclear program.

Facilitating International Action to Combat Iran's Support of Terrorism

The FATF is the premier standard-setting body for AML/CFT (anti-money laundering and combating financing of terrorism) and provides a unique opportunity for Treasury to engage our international counterparts regarding the risks posed by Iran's AML/CFT regime deficiencies. Treasury leads the U.S. delegation to the FATF. Taken as a whole, the FATF's AML/CFT standards are recognized by more than 175 countries and have been endorsed by the United Nations, the World Bank and the International Monetary Fund.

In addition to setting the AML/CFT international standards, the FATF also identifies jurisdictions with serious vulnerabilities in their AML/CFT framework. In early 2007, Iran was identified by FATF as having significant deficiencies in its AML/CFT regime. As a result, the FATF issued a public statement in October 2007 expressing its concern that Iran's lack of a comprehensive AML/CFT regime represents a significant vulnerability within the international financial system. Iran subsequently adopted an anti-money laundering law and met with FATF to discuss its legal framework for AML/CFT. The FATF, however, concluded that the deficiencies in Iran's AML/CFT regime warranted the issuance of another statement that reiterated previous concerns. The latest FATF advisory issued on February 2008, called on all members and non-members alike to advise their financial institutions about the risks posed by Iran's AML/CFT regime. In response many countries � including the UK, Canada, France, Germany, Japan and Malaysia - have advised their financial institutions of the risks inherent in doing business with Iran.

Treasury also issued such advisories to the U.S. financial sector following FATF's advisories, warning them of the general risks of Iranian business and providing specific information about areas of concern related to Iran, including Iran's deceptive financial conduct. The most recent Treasury advisory identified Iranian state-owned and private banks and their branches and subsidiaries abroad. Significantly, it also warned financial institutions about the conduct of the Central Bank of Iran, both in obscuring the true parties to transactions and facilitating transactions for sanctioned Iranian banks.

Facilitating International Action to Combat Iran's Nuclear Ambition

The U.S. has worked within both the United Nations and the FATF to reinforce our targeted financial actions to counter Iran's proliferation activities. Indeed, the international community is working to establish a global framework that addresses the threats posed by Iran and develops effective financial measures. These efforts have focused on increasing multilateral implementation of both targeted financial measures and other financial prohibitions against entities involved in Iranian nuclear and missile proliferation. We have worked with the FATF to provide guidance on the effective implementation of those obligations.

(i) UN Obligations

The State Department has led important U.S. efforts at the UN in the adoption of three Chapter VII resolutions related to Iran's nuclear and missile programs that include significant financial components:

Targeted financial sanctions: UN Security Council Resolution 1737, adopted December 23, 2006, requires the worldwide freezing of the assets of designated key actors associated with Iran's nuclear and missile programs. The Resolution targeted Iran's proliferation infrastructure, requiring all States to freeze the assets of identified individuals and entities and effectively deny them access to the international financial system. The adoption of the resolution and its successor resolution, 1747, also globalizes Treasury's action against Iran's proliferation infrastructure. Many of the individuals and entities identified in the UN Security Council resolutions were already publicly designated by Treasury and State under E.O. 13382.

Activity-based financial prohibitions: UNSCR 1737 also requires states to prevent the provision to Iran of any financial assistance, or the transfer of any financial resources or services, related to the supply, sale, transfer, manufacture, or use of prohibited items associated with Iran's nuclear and missile programs. This measure effectively prohibits the provision of financial services that would allow Iran to procure the prohibited items needed for nuclear or missile programs. It places strong responsibilities on states to press financial institutions to make efforts to ensure they do not provide those financial services. This is a daunting task for financial institutions, and we have worked with the FATF to provide guidance that would assist financial institutions in this preventative effort.

Exercising vigilance over financial institutions' activities with Iranian banks: With the most recent adoption of UNSCR 1803, the Security Council calls upon UN member states to exercise vigilance over the activities of financial institutions in their territories with all financial institutions domiciled in Iran, and their branches and subsidiaries abroad. This provision makes special mention of the risks posed by Bank Melli and Bank Saderat. This measure has critical importance to us, as it significantly reinforces the concerns Treasury has expressed for many months regarding some Iranian financial institutions' deceptive financial conduct and terrorism and proliferation support activities.

(ii) Working with the FATF to Implement UN Obligations

Treasury is working within the FATF to ensure effective implementation of the financial provisions contained in the UN Security Council resolutions. This guidance by the FATF works in conjunction with the UN's effort to develop international commitment and create a framework for countries to counter Iranian financial threat.

In June 2007, the FATF issued initial guidance on the implementation of sanctions and finance-related provisions of UN Security Council resolutions related to proliferation activities in Iran, as well as the threat from other states and non-state actors.
In September 2007, the FATF issued an annex intended to provide guidance on implementing targeted financial sanctions against financial institution, in particular, Bank Sepah, named in UNSCR 1747.
In October 2007, FATF issued additional guidance on implementing activity-based financial sanctions identifying categories of high-risk customers and transactions on which financial institutions could focus their efforts. Risk factors include Iran-related customers or transactions, as well as transactions involving sectors that potentially produce the prohibited goods, among other factors.

UN Security Council Resolution 1803 welcomed the work of FATF and its efforts to provide guidance on how to implement targeted financial measure. Treasury will work with its counterparts within the FATF to continue these efforts.

C. Strategic Dialogue with the Private Sector

We have also reached out to another important stakeholder: the international private sector. Since 2006, we have conducted an unprecedented, high-level strategic dialogue with the international financial private sector, meeting with more than 40 banks worldwide to discuss the threat Iran poses to the international financial system. Secretary Paulson initiated this effort in the fall of 2006 in Singapore during the annual IMF/World Bank meetings. Secretary Paulson met with executives from major banks throughout Europe, the Middle East, and Asia and discussed the various threats posed by Iran. Deputy Secretary Kimmitt, Under Secretary Stuart Levey and Assistant Secretary Patrick O'Brien continue to engage with these institutions abroad, as well as in Washington and New York. Through this outreach, Treasury has shared information about Iran's deceptive financial behavior and raised awareness about the high financial and reputational risk associated with doing business with Iran and the international financial institutions have taken action.

Impact of U.S. Outreach Efforts to the Private Sector

International financial institutions have responded to our message with action that reinforces governmental pressure on Iran. As evidence of Iran's deceptive practices has mounted, financial institutions and other companies worldwide have begun to reevaluate their business relationships with Tehran. Many leading financial institutions have either scaled back dramatically or even terminated their Iran-related business entirely. Many global financial institutions have limited their exposure to Iranian business by cutting off Iranian business in dollars but have not yet done so in other currencies. Regardless of the currency, the core risk with Iranian business � that you cannot be certain that the party with whom you are dealing is not connected to some form of illicit activity � remains the same.

Importance of Private Sector and Targeted Financial Measures

The private sector plays a central role in the implementation of our sanctions. Our ability to effectively communicate with the private sector about Iran has been essential to the success of Treasury's broader efforts. The private sector has been receptive in part due to Treasury's targeted financial strategy that we have increasingly used to combat Iranian threats as well as other threats to the U.S.

When we use reliable financial intelligence to build conduct-based cases, it is much easier to achieve a multilateral alignment of interests. It is difficult for another government, even one that is not a close political ally, to oppose isolating actors who are demonstrably engaged in conduct that threatens global security or humanitarian interests. The private sector also reacts positively to the use of these targeted measures. Rather than comply with just the letter of the law, we have seen many in the banking industry voluntarily go beyond their legal requirements because they do not want to handle illicit business.

The private sector and Treasury share a common interest in protecting the international financial system from illicit conduct. Financial institutions want to identify and avoid dangerous or risky customers who could harm their reputations and business. And we want to isolate those actors and prevent them from abusing the financial system. Once some in the private sector decide to cut off companies or individuals we have targeted, it becomes an even greater reputational risk for others not to follow, and they often do. Such voluntary implementation in turn makes it even more palatable for foreign governments to impose similar measures because their financial institutions have already given up the business, thus creating a mutually-reinforcing cycle of public and private action.

By partnering with the private sector, including by sharing information and concerns with financial institutions, we are increasingly seeing less of a tendency to work around sanctions. In meetings with bank officials abroad, Treasury officials have learned that even those institutions that are not formally bound to follow U.S. law pay close attention to our targeted actions and often adjust their business activities accordingly.

Conclusion

Financial measures are an integral component of U.S. and international efforts to counter Iran's threatening behavior. Through our authorities and our engagement with counterparts around the world, we are implementing a financial strategy that is having an impact. This impact will only be enhanced as the international community continues to crack down on Iran's illicit financial behavior through national action and through organizations such as the UN and FATF. The international financial system is becoming an increasingly challenging and unfriendly environment for Iran's illicit conduct. But it is important that we and our international partners keep up the pressure. This remains a top priority for the Treasury Department and we will continue to work closely with our colleagues in the State Department, foreign governments and international financial community to maximize the effectiveness of our efforts.

Thank you again for the opportunity to appear before you today. I look forward to any questions you have regarding my testimony.

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Treasury Targets Drug Trafficker

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April 15, 2008
HP-928

OFAC Again Targets Network of Colombian Drug Trafficker

Washington − The Department of the Treasury's Office of Foreign Assets Control (OFAC) today added nine individuals and fifteen companies to its list of Specially Designated Narcotics Traffickers. These OFAC designations target two long-time associates of Carlos Alberto Renteria Mantilla � Carlos Currea Correa (a.k.a. "Cucu") and Ramiro Rengifo Puentes (a.k.a. "William Torrijos"). Carlos Alberto Renteria Mantilla ("Beto Renteria") is the only remaining leader of Colombia's North Valle drug cartel, and the U.S. Department of State is offering up to $5 million for information leading to his capture.

"Yesterday, Ramiro Rengifo Puentes was masquerading as a seemingly legitimate businessman with an extensive financial network," said Adam J. Szubin, Director of OFAC. "OFAC's financial strike today exposes him for who he really is � a significant drug trafficker known in the underworld as William Torrijos."

The individuals designated today are two of Beto Renteria's closest drug trafficking associates. Ramiro Rengfio Puentes controls an extensive corporate network in Colombia and Spain that includes Miracana Inmobiliaria Quilichao S.A. & Cia. S.C.A., a sugar cane company in Cali, Colombia; Frontera Virtual S.A., a business services company in Bogota, Colombia; Red de Servicios Inmobiliario Profesionales S.A. (RIPSA), a real estate company in Bogota, Colombia; Ruiz de Alarcon 12 S.L., a real estate development company in Madrid, Spain; and several construction and real estate development companies located in Cali, Colombia - Constructora Umbria S.A., Agroganadera La Isabela S.A., Centro Comercial Guss S.A., Construcciones La Reserva S.A., Constructora Juanambu S.A., and Constructora Loma Linda S.A. Also designated today are seven other individuals who work for and on behalf of Ramiro Rengifo Puentes, including Edwin Amir Rengifo Ospina and Monica Moreno Fernandez.

Today's designation is OFAC's seventh action against the financial network of Beto Renteria since 2005. In March 2005, OFAC named Beto Renteria as a principal individual under the Specially Designated Narcotics Trafficker program pursuant to Executive Order 12978. Beto Renteria is the subject of two U.S. criminal indictments. He was indicted in the Southern District of Florida in 1994 on narcotics trafficking charges and in the District of Columbia in 2004 on Racketeer Influenced and Corrupt Organizations Act (RICO) charges, stemming from his role as a leader of Colombia's North Valle drug cartel.

This designation is part of the ongoing interagency effort by the Departments of the Treasury, Justice, State and Homeland Security and others to implement Executive Order 12978 of October 21, 1995, which applies economic sanctions against Colombia's drug cartels. Today's designation action freezes any assets the designees may have that are subject to U.S. jurisdiction and prohibits all financial and commercial transactions by any U.S. person with the designated companies and individuals.

A detailed look at the program against Colombian drug organizations is provided in OFAC's March 2007 Impact Report on Economic Sanctions Against Colombian Drug Cartels.

http://www.treasury.gov/offices/enforcement/ofac/reports/narco_impact_report_05042007.pdf

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REPORTS

Beto Renteria�s Drug Network